{"id":1164350,"date":"2020-02-07T08:48:36","date_gmt":"2020-02-07T14:48:36","guid":{"rendered":"https:\/\/www.mining.com\/?p=1013248"},"modified":"2020-02-07T08:48:36","modified_gmt":"2020-02-07T14:48:36","slug":"sirius-tells-investors-is-anglos-524m-takeover-bid-or-bust","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1164350","title":{"rendered":"Sirius tells investors is Anglo\u2019s $524m takeover bid or bust"},"content":{"rendered":"<p>Sirius Minerals (LON:SXX), the British junior struggling to build a huge fertilizer mine beneath a national park,&nbsp;has set up the timetable for Anglo American\u2019s <a href=\"https:\/\/www.mining.com\/anglo-american-goes-back-to-fertilizers-with-sirius-minerals-527million-buy\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">\u00a3405 million (about $524m) planned takeover<\/a> and opened a shareholder helpline to explain why they should accept it.<\/p>\n<div class='d-flex justify-content-center d-xs-block d-sm-block d-md-none'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>\u201cThere is no alternative,\u201d the miner <a href=\"https:\/\/otp.tools.investis.com\/clients\/uk\/sirius_minerals\/rns\/regulatory-story.aspx?cid=485&amp;newsid=1363550&amp;culture=en-GB\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">said in a statement<\/a>. \u201cIf the acquisition is not approved by shareholders and does not complete there is a high probability that the Sirius board will place the business into administration or liquidation.\u201d<\/p>\n<p>Shareholders will vote on whether<br \/>\nor not to accept Anglo\u2019s lifeline on March 3. At the peak,&nbsp;around 85,000<br \/>\nindividual private investors had shares in the Yorkshire mine developer, and most<br \/>\nof them were believed to be either first time or fairly inexperienced<br \/>\ninvestors.<\/p>\n<p>Sirius said shareholders could call<br \/>\nthe helpline (0371 664 0321 or 00 800 3742 6163) if they had questions about<br \/>\nthe offer documents, the pending court meeting, general meeting or how to<br \/>\ncomplete proxy voting forms.<\/p>\n<p>Jupiter Asset Management, which<br \/>\ncontrols about 7.8% of Sirius shares, recently urged the company\u2019s board to<br \/>\nexplore a rival approach said to have contacted the company lately. According<br \/>\nto Jupiter, a consortium of financial investors is offering $680 million of<br \/>\ndebt-based funding, which is a proposal that \u201cwould enable shareholders to<br \/>\nremain invested in the project\u201d.<\/p>\n<p>Sirius has repeatedly recommended<br \/>\nthe Anglo takeover as the \u201conly feasible option\u201d and believes the alternative bid<br \/>\nis \u201cnot acceptable\u201d as it would have required the company to \u201cundertake a<br \/>\nsubstantial new equity-raising\u201d.<\/p>\n<p>Anglo\u2019s offer of 5.5p a share is equivalent to one-third more than the targeted company\u2019s market value the day before <a href=\"https:\/\/www.mining.com\/anglo-american-goes-after-potash-mine-developer-sirius-minerals-with-507m-offer\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">the proposed takeover was made public<\/a>.<\/p>\n<p>Sirius, however, was worth more<br \/>\nthan&nbsp;$2.3 billion&nbsp;18 months ago, before its funding plans failed.<\/p>\n<p>The firm, which is midway through&nbsp;building its Woodsmith fertilizer mine in the North Yorks Moors national park, has seen its share price collapse&nbsp;<a href=\"https:\/\/www.mining.com\/sirius-minerals-shares-crash-after-scrapping-500m-fundraising-plan\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">after warning last September<\/a>&nbsp;that multibillion dollar&nbsp;funding for the next stage had fallen through. It warned at the time it only had enough cash to last&nbsp;another six months.&nbsp;<\/p>\n<p>The company has already raised \u00a3920<br \/>\nmillion ($1.2bn) to develop Woodsmith and received the backing of thousands of<br \/>\nlocal retail investors, but needs a further $3.8bn to turn it into the world\u2019s<br \/>\nbiggest producer of polyhalite, a multi-nutrient fertilizer.<\/p>\n<p>As a last resource, Sirius launched in November a rescue plan involving the participation of a potential strategic investor and a&nbsp;<a href=\"https:\/\/www.mining.com\/sirius-minerals-unveils-rescue-plan-for-uks-biggest-fertilizer-mine\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">revised two-stage development plan<\/a>&nbsp;for the mine.<\/p>\n<p>Anglo seems to be just what Sirius<br \/>\nhas been waiting for. The British junior said it was prepared to recommend the<br \/>\noffer provided it can secure satisfactory assurances around jobs and other<br \/>\n\u201cstakeholder interests.\u201d<\/p>\n<p>If the deal goes ahead, if could<br \/>\nsave more than 1,000 jobs in one of England\u2019s most underprivileged areas, which<br \/>\ngoes hand in hand with Prime Minister Boris Johnson\u2019s pledge to revive poorer<br \/>\nregions of the UK.<\/p>\n<h2><strong>Long time coming<\/strong><\/h2>\n<p>Anglo American, which is&nbsp;<a href=\"https:\/\/www.mining.com\/anglo-american-lowers-thermal-coal-production-forecast-amid-move-to-exit-sector\/\"  rel=\"noreferrer noopener\">looking to retreat from thermal coal,<\/a>&nbsp;hinted the<br \/>\nunexpected bid had been in the works for months. It noted it identified the project<br \/>\nas being of potential interest \u201csome time ago\u201d due to its quality in terms of<br \/>\nscale, resources and costs.<\/p>\n<p>\u201cWe are unashamedly transitioning our portfolio to later cycle products that we believe the world will need as it goes forward,\u201d chief financial officer, Stephen Pearce,&nbsp;<a rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\" href=\"https:\/\/www.angloamerican.com\/~\/media\/Files\/A\/Anglo-American-Group\/PLC\/investors\/offer\/analyst-call-anglo-american-response-to-statement-from-sirius-minerals-plc.wav\" >said on a call<\/a>&nbsp;last month with reporters.<\/p>\n<p>If successful, the takeover would<br \/>\nmark a comeback to the fertilizer sector for Anglo, which owned some phosphate<br \/>\nassets in the past but in recent years has focused on \u201cfour pillars\u201d \u2014 copper,<br \/>\niron ore, diamonds and platinum.<\/p>\n<p>It would also add a second major<br \/>\nproject to&nbsp;<a href=\"https:\/\/www.mining.com\/anti-mining-protests-in-peru-threaten-5bn-quellaveco-copper-project\/\"  rel=\"noreferrer noopener\">Anglo\u2019s $5bn Quellaveco copper mine in Peru<\/a>, at a time when<br \/>\nmost rivals are reluctant to expand.<\/p>\n<p>\u201cWe fundamentally believe part of<br \/>\nour responsibility is to keep an eye on growth over all the aspects of<br \/>\ndifferent time frames,\u201d Pearce added.<\/p>\n<p>Analysts, such as Humphrey Knight,<br \/>\nsenior potash analyst at CRU, consider Anglo\u2019s move risky.<\/p>\n<p>\u201cSirius\u2019 planned production is around 30 times larger than the total polyhalite market size in 2018. The company\u2019s plan to rapidly increase production to over 10 million tonnes only a few years after starting operations, which adds to concerns of significant disruption to wider fertilizer markets \u2014 even with its numerous offtake agreements,\u201d Knight&nbsp;told&nbsp;MINING.COM&nbsp;<a href=\"https:\/\/www.mining.com\/sirius-minerals-shares-crash-after-scrapping-500m-fundraising-plan\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">in September<\/a>.<\/p>\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.mining.com\/wp-content\/uploads\/2019\/03\/sirius-minerals-extraction-proccess.png\" alt=\"Sirius Minerals extraction plan\" class=\"wp-image-975857\" srcset=\"https:\/\/www.mining.com\/wp-content\/uploads\/2019\/03\/sirius-minerals-extraction-proccess.png 992w, https:\/\/www.mining.com\/wp-content\/uploads\/2019\/03\/sirius-minerals-extraction-proccess-300x190.png 300w, https:\/\/www.mining.com\/wp-content\/uploads\/2019\/03\/sirius-minerals-extraction-proccess-768x485.png 768w\" sizes=\"(max-width: 992px) 100vw, 992px\" \/><figcaption>This is how Sirius plans to extract polyhalite. (Courtesy of <em><a href=\"http:\/\/siriusminerals.com\/media\/photo-gallery\/>Sirius Minerals.<\/a><\/em>)<\/figcaption><\/figure>\n<p>He noted that the underlying<br \/>\nuncertainties around polyhalite, including potential market size and pricing,<br \/>\nremain.<\/p>\n<p>Sven Reinke, senior vice president<br \/>\nand lead analyst for Anglo American at Moody\u2019s Investor Service, believes that<br \/>\na successful acquisition&nbsp;of Sirius would increase Anglo\u2019s financial risk<br \/>\nprofile for a number of years.<\/p>\n<p>\u201cThis is driven by the very<br \/>\nmaterial capital investment needed over the next few years to complete the<br \/>\nSirius polyhalite mining project,\u201d Reinke wrote.<\/p>\n<p>Ed Sterck, metals &amp; mining<br \/>\nanalyst at BMO Capital Markets, believes that while there are question marks<br \/>\nover the nearer-term demand for POLY4, Anglo American is clearly attracted to<br \/>\nthe scale of the project.<\/p>\n<p>\u201cThis would certainly be a<br \/>\ncounter-cyclical investment (for the fertilizer market), but given the<br \/>\nextremely long mine life this may present an interesting opportunity in a<br \/>\n\u2018green\u2019 commodity over the longer term,\u201d Sterck wrote in January.<\/p>\n<p>BMO expects the potash to remain in<br \/>\noversupply until 2027, meaning that the near-term take-up of what it calls a<br \/>\n\u201ccommercially unproven alternative\u201d may be limited.<\/p>\n<p>The Woodsmith mine, poised to be<br \/>\none of the world\u2019s largest in terms of the amount of resources&nbsp;extracted,<br \/>\nis set to generate an initial 10 million tonnes per year of polyhalite, which<br \/>\ncontains four of the six key elements needed for plant growth (potassium,<br \/>\nsulphur, magnesium and calcium).<\/p>\n<p>Construction involves sinking two<br \/>\n1.5km shafts and is expected to create about 1,800 jobs during construction, as<br \/>\nwell as 1,000 permanent positions once it opens.<\/p>\n<p>The ore will be extracted through<br \/>\nthe shafts and transported to Teesside on the world\u2019s longest underground<br \/>\nconveyor belt, via a 37km-underground tunnel. It will then be granulated at a<br \/>\nmaterials handling facility, with the majority being exported to overseas<br \/>\nmarkets.<\/p>\n<p>Under UK takeover rules, Anglo<br \/>\nAmerican has until Feb. 5 to announce a firm intention to make an offer or walk<br \/>\naway for six months.<\/p>\n<p>Bank of America Corp. and<br \/>\nCenterview Partners U.K. LLP are the joint financial advisers to Anglo<br \/>\nAmerican, while JPMorgan is advising Sirius Minerals.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Company has set up a shareholder helpline to guide tens of thousands of individual investors who bet on the Woodsmith fertilizer project.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[949,369,4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1164350"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1164350"}],"version-history":[{"count":6,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1164350\/revisions"}],"predecessor-version":[{"id":1164389,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1164350\/revisions\/1164389"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1164350"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1164350"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1164350"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}